TMI Blog2002 (6) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned above on the ground that while completing the assessment for the above-mentioned year, the AO had allowed 'cess' on green leaf paid to the Government by the assessee-company as business expenditure, disregarding the fact that the Hon'ble Gauhati High Court in the case of Jorhaut Group Ltd. vs. Agrl. ITO (1997) 226 ITR 622 (Gau) had held that cess would be deductible from agricultural income in the course of agricultural income-tax proceedings. According to the AO, allowance of cess in the income-tax proceedings has made the assessment order for the above-mentioned year erroneous and prejudicial to the interest of Revenue. 4. The brief facts of the case are that the appellants are Indian companies engaged in the business of growi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Constitution of India, namely tax on agricultural income) and partly by the Union subject (as contained in Entry 82 of List I of the Seventh Schedule of the Constitution of India, namely, tax on income other than agricultural income). Incidentally, the legislative power to levy tax by Parliament and State legislature is contained in Art. 246(1) and (3) respectively of the Constitution of India. In Tata Tea Ltd. vs. State of West Bengal (1998) 70 CTR (SC) 99 : (1988) 173 ITR 18 (SC), the Hon'ble Supreme Court analysed the provisions as under: "A perusal of the aforesaid r. 8(1) makes it clear that under the said rule, income from sales of tea grown in India has to be computed as if it were income derived from business which would im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or the provisions that have overriding effect are the provisions of the Central Act and the Central Rules. After determination of the income on the basis that it is only business income determined in accordance with the Central Act, 40 per cent thereof is to be charged to Central income-tax. Any further deduction allowable under the Agricultural Act is neither to be taken cognizance of nor would result in allowance or disallowance of any expenditure allowable under the Central Act. The green leaf cess paid under the Assam Taxation (on Specified Lands) Act, 1990, is a tax payable by the appellant at specified rates on every kilogram of tea produced i.e., an expenditure incurred in carrying out the business of growing, manufacturing and sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y expenditure specified in s. 8(2) would not be further allowable if the said expenditure is allowed under the Central income-tax assessment of the assessee. It is, therefore, claimed that as the assessee said case had not claimed the deduction from the composite income, the same was allowed from the agricultural income. It is well settled law that the ratio decidendi of a Court decision should be derived from the totality of the facts and circumstances of the case. It has been held by the Hon'ble Supreme Court in its decision in CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC) that the judgment of a Court must be read as a whole and the observations from the judgment has to be considered in the ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral income even for the purpose of State enactments will have to be that which is made under the provisions of the IT Act and Rules made thereunder. Therefore, as far as computation of income is concerned for assessees engaged in growing, manufacturing and sale of tea, the provisions of the Central Act and Central Rules are supreme and read with the second proviso to s. 8(2) of the Agrl. Act, there is no question of any allowance under s. 8(2)(e) of the Agricultural Act. Even otherwise, the Hon'ble Gujarat High Court has not taken into consideration binding decisions of the Supreme Court referred to above, which were existing when this judgment was rendered. In Tata Tea Ltd. case, the Supreme Court has held that a perusal of r. 8(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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